With its partner in the Scarborough field in WA’s Carnarvon Basin, ExxonMobil, reluctant to endorse the project, it would seem North American gas market margins would not yield enough returns if BHP had to use a third party facility to regassify the LNG thereby losing that portion of potential profits.
BHP's seemingly single focus, West Coast gas strategy is in contrast to the company's Gulf of Mexico oil efforts, which has experienced significant success in finding and developing a number of fields, including Typhoon, Genesis, Neptune, Shenzi, Mad Dog and Atlantis.
BHP would not release the contents of the briefing on the project which vice president, Pilbara LNG, Neil Croker outlined before the audience at Western Australia's Petroleum Club on Tuesday evening.
Croker detailed the opposition that was mounting in California against the project and BHP’s responses to the community concerns.
In January the US Coast Guard invoked its right to ‘stop the clock’ on the plans to develop the Cabrillo Port facility.
The Coast Guard must approve all offshore projects in the US and has 12 months to appraise and approve any development proposals, but can also ‘stop the clock’ at any time in the review process, as it has done with Cabrillo Port, to obtain further information from the developers of the project.
With many LNG receival facilities proposed for North America's wesst coast but estimated room for only two more facilities, Croker was asked what fall-back position BHP had if their offshore terminal was knocked back.
He said BHP would turn its attention to Asian markets. But company was not targeting the potentially enormous Indian market, as supply was expected to be met by cheaper Middle Eastern producers, according to Croker.
Gas from the Scarborough field is planned to be processed at a site around 4km south of the north west town of Onslow. The project is examining several concepts for the field development that would connect to a single train with capacity of approximately 6 million tones per annum.